HOME SALES, PRICES HIT MULTIYEAR HIGHS IN S.D.

Increases fueled by low mortgage rates and growing demand

Pent-up housing demand and low mortgage rates have pushed home prices and sales toward multiyear highs in San Diego County, based on a report from local real estate tracker DataQuick released Tuesday.

The median price for a home sold last month was $406,500, a 2 percent bump from April and a 21 percent jump from a year ago. That’s the highest level since February 2008, when the median was $415,000. Prices have held a five-year high for the past two months.

Increased demand for homes also is reflected in May sales numbers. Countywide, a total of 4,236 properties were sold. That’s the highest tally since June 2006, when 4,533 sales were recorded. Southeastern Carlsbad had the most number of sales at 123.

Home values began their steady rise more than a year ago and exploded with double-digit annual increases starting in September. Those increases have only become more pronounced in recent months.

The same factors are involved in what real estate experts have called an unusual market. Potential buyers, lured by near-bottom mortgage rates, are competing for a limited supply of homes that can sometimes lead to all-out bidding battles. The county also has been seeing a lower mix of distressed sales, including foreclosures and short sales, which tends to drive up the median price.

“We’re deep into uncharted territory: amazingly low mortgage rates, a razor-thin inventory of homes for sale, and the release of years’ worth of pent-up demand,” said DataQuick president John Walsh in the Tuesday report. “Plus there’s a seemingly endless stream of investors and non-investors who pay cash and thereby avoid the loan-qualification process.”

Cash, often preferred by home sellers, can be another hurdle for buyers who depend on mortgage financing. In the spring, about 30 percent of total sales in San Diego County were completed in cash.

A record amount of $4.65 billion in cash was poured into Southern California real estate in May, either in down payments or for purchases, DataQuick reported. The all-time high suggests buyers have a renewed confidence in the housing market since they’re putting more skin in the game, the report says.

Home prices could ease if more property owners choose to list their homes on account of the latest annual price gains. The county saw its first significant listings uptick in about three years. There are about 4,800 homes on the market right now, a 7 percent uptick from the previous month, based on numbers from the Greater San Diego Association of Realtors. Still, listing supply is about 22 percent lower than a year ago.

Walsh, of DataQuick, says it’s too early to say how market dynamics will play out or whether the region’s heading toward the danger zone of another housing bubble.

“History suggests that’s a tough call early on,” he said in the report. “What seems obvious is that if prices keep rising fast, they’ll cause many more people to list their homes for sale, and that increase in supply should at least slow the rate of price appreciation.”